PROFESSIONAL DISC GOLF ASSOCIATION, INC. FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016

Transcription

1 FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016

2 TABLE OF CONTENTS Independent Auditor's Report 1-2 Financial Statements: Statements of Financial Position Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6-9 Supplementary Information: Schedules of Functional Expenses 11-12

3 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Professional Disc Golf Association, Inc. We have audited the accompanying financial statements of the Professional Disc Golf Association, Inc. (a nonprofit organization), which comprise the statements of financial position as of December 31, 2017 and 2016, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Professional Disc Golf Association, Inc. as of December 31, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America Executive Center Drive Martinez, Georgia Office (706) Fax (706)

4 Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses on pages 11 and 12 are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Martinez, Georgia July 23, 2018

5 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2017 AND 2016 ASSETS Current assets Cash and cash equivalents $ 1,213,350 $ 850,209 Accounts receivable, net 62, ,874 Inventory 81,107 51,489 Prepaid expenses 190, ,438 Total current assets 1,546,936 1,406,010 Non-current assets Endowment fund 50,094 22,902 Property and equipment, net 53,132 59,628 PIntangible asset 300,000 59,628 Total non-current assets 403,226 82,530 Total assets $ 1,950,162 $ 1,488,540 LIABILITIES AND NET ASSETS Current liabilities Accounts payable $ 132,577 $ 86,668 Accrued liabilities 1,639 3,446 Accrued leave compensation 13,813 15,045 Deferred revenue 590, ,362 Current portion of long-term debt 75,000 - Total current liabilities 813, ,521 Long-term obligations, less current portion 150,000 - Net assets Temporarily restricted net assets 50,094 22,902 Unrestricted net assets 936, ,117 Total net assets 986, ,019 Total liabilities and net assets $ 1,950,162 $ 1,488,540 See notes to financial statements. 3

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 CHANGE IN UNRESTRICTED NET ASSETS Unrestricted revenue Dues and membership fees $ 1,994,540 $ 1,684,626 Tournament events 1,334,183 1,018,526 Merchandise 199, ,235 Sponsors 99,052 94,616 Investment earnings Other income 7,021 30,506 Total unrestricted revenue 3,634,585 3,050,556 Expenses Program services 2,589,586 1,964,676 Management and general 907, ,889 Total expenses 3,497,386 2,743,565 Net increase in unrestricted net assets 137, ,991 CHANGE IN TEMPORARILY RESTRICTED NET ASSETS Contribution revenue 30,213 7,773 Administrative fee (3,021) (777) Net assets released from restrictions - - Net increase in temporarily restricted net assets 27,192 6,996 Net increase in net assets 164, ,987 Net assets, beginning of year 822, ,032 Net assets, end of year $ 986,410 $ 822,019 See notes to financial statements. 4

7 PROFESSIONAL DISC GOLF ASSOCIATION, INC STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $ 164,391 $ 313,987 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 22,070 24,570 Loss on disposals of property and equipment 3,220 - Changes in operating assets and liabilities providing (using) cash: Accounts receivable 241,526 63,444 Inventory (29,618) (2,119) Prepaid expenses 10,308 (47,076) Accounts payable 45,909 (13,003) Accrued liabilities (1,807) 999 Accrued leave compensation (1,232) 5,879 Deferred revenue 29,360 87,378 Net cash provided by operating activities 484, ,059 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (18,794) (30,624) Net cash used in investing activities (18,794) (30,624) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings net repayments long-term obligations (75,000) - Investment in endowment (27,192) (6,996) Net cash used in financing activities (102,192) (6,996) NET INCREASE IN CASH AND CASH EQUIVALENTS 363, ,439 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 850, ,770 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,213,350 $ 850,209 See notes to financial statements. 5

8 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Nature of activities - The Professional Disc Golf Association (the "Association") has been incorporated since The Association was formed to promote the development of disc golf as a sport for all ages. Standard Rules of Play are issued from the Association to guide officials in tournament formats, rules, equipment and other aspects of disc golf. The members are eligible to compete in national and international, professional and amateur disc golf tournaments and competitions throughout the United States of America and around the world. The Association generates revenues primarily through membership dues, tournament events, and merchandise sales. Basis of accounting and use of estimates - The financial statements of the Association have been prepared on the accrual basis of accounting and follow accounting principles generally accepted in the United States of America as applied to nonprofit organizations. The financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of presentation - The Association reports information regarding its financial position and activities according to three classes of net assets (unrestricted net assets, temporarily restricted net assets and permanently restricted net assets) based upon the existence or absence of donor-imposed restrictions. Accordingly, all financial transactions have been recorded and reported by the following categories: Unrestricted - Net assets that are not subject to donor-imposed restrictions and are fully available at the discretion of management and the Board of Directors to be used to carry out the operations of the Association in accordance with its bylaws. Temporarily restricted - Net assets subject to donor-imposed restrictions that will be met either by actions of the Association and or the passage of time. When a restriction is fulfilled, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Association had $50,094 and $22,902 in temporarily restricted net assets as of December 31, 2017 and 2016, respectively. See Note 3 for additional details on the temporarily restricted net assets as of December 31, Permanently restricted - Net assets subject to donor-imposed restrictions that require the assets be maintained permanently by the Association. As of December 31, 2017 and 2016, the Association had no permanently restricted net assets. Cash and cash equivalents - The Association considers all unrestricted, highly-liquid investments with an initial maturity of three months or less to be cash equivalents. At times, these deposits are in excess of the Federal Deposit Insurance Corporation limit. Inventory - The Association's inventory consists primarily of disc golf related goods and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Accounts receivable Accounts receivable represents amounts due from the Association s various revenue sources. The Association s accounts receivable consists of membership fees, sanctioning fees, official s exams, online store sales and advertising billed but not yet received. Accounts are written-off when deemed uncollectible and a reserve is established for potentially uncollectible accounts. Accounts are generally unsecured and credit losses have been within management s expectations. As of December 31, 2017 and 2016, the allowance for doubtful account balances totaled $2,400 and $38,175, respectively. 6

9 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES, (continued) Property and equipment - Property and equipment are stated at cost. Donated property and equipment are stated at fair value as estimated by management. Renewals and betterments are capitalized at cost and maintenance and repairs are charged to expense as incurred. Depreciation is computed over the estimated useful lives of assets using the straight-line method. Intangible assets Intangible assets represent costs incurred to obtain various domain names each estimating to have an indefinite life. During the year ended December 31, 2017, the Association s total intangible assets amounted to $300,000. Revenue recognition - Membership dues are recognized as revenue when earned over the applicable membership period. Grants and other contributions of cash are reported as temporarily restricted support if they are received with donor stipulations. Restricted contributions and grants that are made to support the Association's current year activities are recorded as unrestricted revenue. Contributions of assets other than cash are recorded at their estimated fair value. Any unearned amounts are included in deferred revenue at the end of each accounting period. Donated services - A substantial number of unpaid volunteers have made significant contributions of their time to the Association. The value of their time is not reflected in these financial statements because it is not susceptible to objective measurement and valuation. Income taxes - The Association is a not-for-profit organization and is exempt from federal income tax under Section 501(c) of the Internal Revenue Code other than net unrelated business income. There was no unrelated business income tax required to be reported in the accompanying financial statements for the years ended December 31, 2017 and Accounting principles generally accepted in the United States of America requires management to evaluate tax positions taken by the Association and recognize a tax liability (or asset) if the Association has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by the Association, and has concluded that as of December 31, 2017 and 2016, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Association is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Income tax and information returns for the years ended December 31, 2015 or later remain subject to examination by various taxing authorities. Allocation of expenses - The Association allocates its expenses on a functional basis among its various programs and support services. Expenses that can be identified with specific programs and support services are directly allocated thereto. Other expenses that are common to several functions are allocated by percentages determined by management. Advertising - Advertising costs are expensed as incurred. 7

10 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 NOTE 2 - PROPERTY AND EQUIPMENT At December 31, 2017 and 2016, property and equipment are as follows: NOTE 3 ENDOWMENT FUND NOTE 2 -- Property and Equipment Property and equipment $ 248,390 $ 251,784 Construction in process - 8,206 less accumulated depreciation (195,258) (200,362) $ 53,132 $ 59,628 During the year ended December 31, 2017, the Association recognized contributions to one endowment fund held by The Disc Golf Foundation, (the Foundation ) for the benefit of the Association. The funds are to be used for the construction of courses and other International Disc Golf Center site facilities and to furnish the International Disc Golf Center headquarters building, on an ongoing basis. The Foundation holds any contributions received in a bank account until funds are requested by the Association in accordance with a Memorandum of Understanding between the Association and the Foundation. The Foundation retains 10% of each contribution as an administrative cost for managing the fund. All of the activity in the endowment fund for the year ended December 31, 2017 was temporarily restricted. NOTE 4 LONG-TERM OBLIGATIONS Endowment net assets, 12/31/2015 $ 15,906 Contributions 7,773 Administrative fee (777) Endowment net assets, 12/31/ ,902 Contributions 30,213 Administrative fee (3,021) Endowment net assets, 12/31/2017 $ 50, Note payable to individual, requiring annual payments of $75,000, interest free, due December 2020 $ 225,000 $ - 225,000 - Less: current portion of long-term obligations 75,000 - $ 150,000 $ - Aggregate maturities of long-term obligations subsequent to December 31, 2017 are as follows: 31-Dec-18 $ 75, Dec-19 75, Dec-20 75,000 $ 225,000 8

11 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 NOTE 5 - REVENUE AGREEMENT WITH COLUMBIA COUNTY Under an agreement dated July 21, 2009, the Association operates the Disc Golf Center as a public facility available to all individuals. On a monthly basis, Columbia County is to receive 3% of user fees and net revenues from merchandise sales, food sales, other sales, vending machines, lessons, seminars, tournaments and other events held at the Disc Golf Center. For the years ended December 31, 2017 and 2016, amounts paid to Columbia County by the Association were immaterial to the financial statements as a whole. NOTE 6 - CONCENTRATION As of December 31, 2017 and 2016 approximately 16% and 84% of the Association's accounts receivable balance was from one source. Management does not consider this to be a material credit risk as a default in the amount due from this source would not have a significant impact on the Association's ability to meet its obligations. NOTE 7 LESSEE LEASE On July 21, 2009, the Association entered into a lease agreement with Columbia County, Georgia. The lease agreement permits the Association use of the facility for $600 per month which may be renewed every two years beginning April 1 of the year in which the renewal occurs. The lease agreement was renewed on February 20, 2012 and included an increase to $800 per month. For both of the years ended December 31, 2017 and 2016, the Association had total rent expense of $9,600. NOTE 8 - RETIREMENT PLAN The Association sponsors a retirement plan covering employees with at least $5,000 of compensation from the Association for the preceding year. The Association matches the first 3% of eligible employee contributions. Contributions to the plan made on behalf of the Association amounted to $16,043 and $15,531 for the years ended December 31, 2017 and 2016, respectively. NOTE 9 - RISK MANAGEMENT The Association is exposed to certain risk of loss, theft of, damage to and destruction of assets; errors and omissions; natural disaster; injuries to employees; and employee dishonesty. The Association maintains commercial insurance coverage to cover each of the above risks. The Association has not diminished its coverage during the years ended December 31, 2017 and Management believes that the coverage is adequate to preclude any significant uninsured risk exposure. NOTE 10 - SUBSEQUENT EVENTS The Association has evaluated events through July 23, 2018, the day which the financial statements were available to be issued. 9

12 SUPPLEMENTARY INFORMATION

13 PROFESSIONAL DISC GOLF ASSOCIATION, INC SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2017 Management Program and Services General Total Salaries $ 303,124 $ 303,124 $ 606,249 Employee benefits and payroll taxes 65,214 65, ,426 Legal and professional fees - 159, ,893 Postage and shipping 2, ,871 Office supplies 7,194 28,777 35,971 Telephone and communications 15,005 15,004 30,008 Rent and utilities 17,825 4,456 22,281 Conferences, conventions and meetings 30,658 30,657 61,314 Depreciation 11,035 11,035 22,070 Contract labor 3,180-3,180 Internet technology 211, , ,668 Marketing and promotional 147, ,424 Member supplies and mailings 436, ,861 Merchandise and member service 615, ,583 Insurance 70,107-70,107 Travel 20,441-20,441 PDGA tournament and events 635, ,653 International events 13,725-13,725 Charitable donations - 6,323 6,323 Bad debt (recoveries), net (17,075) - (17,075) Miscellaneous expenses - 71,412 71,412 Total $ 2,589,586 $ 907,800 $ 3,497,386 11

14 PROFESSIONAL DISC GOLF ASSOCIATION, INC SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2016 Management Program and Services General Total Salaries $ 271,810 $ 271,810 $ 543,620 Employee benefits and payroll taxes 58,967 58, ,932 Legal and professional fees - 106, ,616 Postage and shipping 1, ,138 Office supplies 2,133 8,531 10,664 Telephone and communications 14,666 14,665 29,331 Rent and utilities 15,554 3,889 19,443 Conferences, conventions and meetings 26,368 26,367 52,735 Contract labor 12,285 12,285 24,570 Depreciation 2,816-2,816 Internet technology 136, , ,126 Marketing and promotional 99,387-99,387 Member supplies and mailings 354, ,371 Merchandise and member service 417, ,239 Insurance 47,409-47,409 Travel 26,589-26,589 PDGA tournaments and events 457, ,108 International events 20,618-20,618 Charitable donations - 11,448 11,448 Bad debt (recoveries), net (418) - (418) Miscellaneous expenses - 127, ,823 Total $ 1,964,676 $ 778,889 $ 2,743,565 12